Small Business Administration pushes for more communication, counseling with clients

Saturday, June 14, 2014 | 6:00 a.m. CDT

BY
JOYCE M. ROSENBERG/The Associated Press

NEW YORK — Loans are the primary reason small businesses seek help from the Small Business Administration, but the new head of the agency says that more capital may not be what owners always need.

Maria Contreras-Sweet has been a small business owner herself, most recently as co-founder of Promerica Bank, a Los Angeles-based lender focused on small companies. That experience not only helped her win the SBA post, it gives her insight into what could aid small companies the most.

A biographical snapshot of Maria Contreras-Sweet

Maria Contreras-Sweet, head of the Small Business Administration

Age: 58

Hometown: Los Angeles

Resides: Washington, D.C., area

Education: Attended California State University, Los Angeles

Career: Owned companies including Fortius Holdings, a private equity and venture fund, and Promerica Bank, a lender serving small businesses in Los Angeles. Corporate executive at Westinghouse's 7UP/RC Bottling Co. Served as secretary of California's Business, Transportation and Housing Agency.

Family: Husband, Ray and three children

Hobbies: Hiking, traveling with her family, skiing

Last book read: "David and Goliath: Underdogs, Misfits and the Art of Battling Giants" by Malcolm Gladwell

Favorite quote: What her grandmother told her: "It's not the titles you have that matter, it's what you do with the titles that matters."

Greatest challenge as a business owner: When Contreras-Sweet started her first company, she used money from her Westinghouse stock options to fund it and took out a loan under a program to help businesses owned by women. Because she was busy running the company, she asked her husband to pay the company's invoices. During an audit of her status, she was told, "you're not really a woman-owned business because the financial aspect of your business is actually run by your husband. And I said, 'follow the money, see where it came from.'"

Greatest success as a business owner: "I'm really proud of having built a financial institution."

"I think the counseling is almost more important than the lending. The lending is vital; we need access to capital for sure. But sometimes as I sat at the bank, business owners would ask me for a loan, and I'd say, you're just not managing your cash well. Let's talk about your cash flow, let's talk about the business plan. Can I help you enough so you don't need that extra line of credit?" she said in an interview this week.

"And so many times, we'd give them a line of credit, and then it wasn't deployed accurately or effectively or efficiently. I think our counseling programs can be key to our success."

Two months into her tenure, Contreras-Sweet is still getting a handle on what's working at the SBA and what needs to be changed. One area of focus is the way the agency communicates with small businesses. She's recently launched a Twitter account to better connect with the public and says she's also changing the way she's taking in information.

And even though she thinks more counseling could be the key to helping owners be more successful, faster loan processing is also a priority. On Tuesday, she announced the SBA is giving banks what's called a predictive business credit scoring model, a tool to help them forecast whether a borrower is likely to repay a loan. It's designed to speed loan approvals.

Contreras-Sweet wants to know if these programs are working. She talked about her concerns, and her agenda. Here are excerpts from the interview with the Associated Press, edited for brevity and clarity:

What have you found so far at the SBA that needs to be changed to help small businesses?

More Americans should be made aware about the opportunities SBA helps create. And, how impressive it is that, at every key intersection of a business person's cycle, the SBA has a response to their needs. I'm not certain that has been made abundantly clear to entrepreneurs. So I think first and foremost that's something we want to focus on, how we communicate about the products, the services, the programs, that already exist.

How do you do that?

We need to learn how to use all the media that's available to us — the traditional, social media and informal ways of communicating. For example, instead of watching the evening news shows, I find younger people are watching shows like Jon Stewart's "The Daily Show." We need to understand where people are and how they're getting information and make sure we're adapting to the new ways people are receiving information.

I've launched a Twitter account. I need to start opening up the way I communicate and the way I get information and the way I distribute information.

What else is on your agenda for small business?

We're conducting an external analysis about gaps in our programs that serve different segments of the population. For example, lending to African-Americans. We've made a lot of progress, but we need to do more. Another example is our senior business owner population. We've seen economies where birth rates have fallen and as a result, their labor force is shrinking and they have challenges in maintaining their productivity per person. What can we do to anticipate that in the U.S.? At the SBA, we have a terrific Encore program for older entrepreneurs. Is that sufficient?

The SBA's Office of Advocacy has issued a report about the government's inability to reach its goal of giving contracts to small businesses. What can you do to improve that situation?

We are making sure through our counseling centers that we're communicating the opportunities that are available. Our website, BusinessUSA, is important. Business owners can visit it and learn about what's going on in the Agriculture Department, the Defense Department or the Department of Transportation. We've got to make sure those channels of communication are useful.

It's also important to see if there are more industries we can target for contracts for businesses owned by women.

How does being a Hispanic woman affect your approach to helping small business owners?

It helps me ask, are our programs culturally competent? There are certain cultural nuances in the way we approach things. So do we have the cultural competency in our lending institutions? For example, in our institution, I'd hear from everyone about how important their privacy was. In some communities, people would say to me, I'm not very comfortable talking about money. We need to be respectful of cultural nuances to make sure we're talking to people in a way that makes them comfortable.